MARKET INSIGHTS – FOR THE MODERN DAY FINANCE EXECUTIVE

The list of skills required for a Finance Executive, even the most seasoned CFO, is long and growing beyond traditional financial custodianship: strategy, leadership presence, operational skills, industry expertise and an international outlook are among them.

At the same time, the dynamics of recruiting in the CFO market is changing significantly. Driven by several trends, including a rising number of CFOs taking early exits or moving into the CEO positions, the role expansion (the new COO) and many public companies expressing a strong preference for the “been there, and done that” individual, due to risk adverse Boards.

Today’s market: Although in general terms the supply of candidates does outstrip the demand of available jobs. These past 12 months at the $200 – 400K level for Finance Executives has been busier than ever for our Consultants. However, it is worth noting that we are retained to identify, evaluate and acquire those hard to find skills and experiences or those individuals with credentials in very short supply – and are not active in the market.

An example of some recent searches and interim engagements include:

I have been working with Executives, Boards and Private Equity owners across a variety of sectors for over a decade now – completing over 100 Executive Finance searches and senior leadership positions across strategy and commercial finance. A question posed to me most days is: What does the modern day finance executive need to be aware of?

An evolving market: We’re seeing faster turnover among Finance Chiefs, companies are less patient with their CFOs, who often take the fall for missing guidance. Once a CFO loses credibility with investors, it’s hard to regain it. Interestingly, while boards and management are perhaps exercising less patience with CFOs and showing them the door sooner than they might have previously, companies are also taking longer to select a new candidate.

That presents a big challenge as CEOs and boards are increasingly interested in hiring seasoned CFOs over candidates who haven’t sat in the public company CFO chair. ASX listed companies want a CFO who has seen a lot from an IR perspective and who will be well-equipped to help the CEO develop a strategic response to an activist shareholder. If a candidate has experience with handling shareholder activism, that is something he or she can highlight as part of their track record to distinguish themselves from others.

What’s in your tool kit? Foremost many businesses are expanding into new territories or internationally hence prior “new markets” experience is key. It’s been gaining in popularity for some time, but more and more clients see this as a growth imperative. We’ve always heard this from multinationals, but increasingly it’s coming from smaller domestic companies too. Many companies have begun making offshore acquisitions and are doing more outsourcing globally, and they want their next CFO to have that global experience and perspective.

Companies place a strong understanding of operations at the top of their list, along with organisational leadership skills. The focus on an operationally capable Finance Executive who has worked at the business unit level, transcends industry sectors. I don’t want to over-generalise, however, because what organisations seek in a CFOs is often company- and situation-specific. A highly leveraged company, for example, may prefer candidates experienced within capital markets that can confidently address the various treasury-related issues. Business partnering, leadership, and experienced in transformations are also among our clients’ frequent must haves.

If a Finance Executive can show they’ve been involved in driving value through the effective use of customer data and analytics, that’s a big plus. Especially with mass consumer orientated companies, there is a need for Finance Executive who is adept at taking customer data and analytics and using that information to improve business and the way they market products and services. There simply aren’t enough of those executives around right now. For those whose organisations have made some progress in data analytics, you should make sure you’re involved in that work.

The Boardroom view: Boards have become more risk averse, at the same time they’re feeling ongoing pressures from fund managers, this translates into many ASX listed company boards wanting to hire seasoned public company CFO. Even in companies with strong internal talent (GM Finance or Deputy CFO in place) Boards are still interested in seeing a prior track record of experience. It becomes hard to resist going after someone who has already sat in the chair at a major public company. They want to play it safe! They want a strategic CFO who’s operationally oriented, has prior IR experience.

We see an increasing interest from Boards in CFOs who’ve demonstrated that they have commercial and operational abilities and may be able to run part or all of the company one day. Boards also may be more focused on risk issues, such as data privacy, so they tend to be comfortable with executives who have a strong controls orientation. We’re also seeing greater interest from CEO/Boards in expanding the diversity of their leadership team, making diversity and inclusion a greater priority now more than ever before.

The modern day Finance Executives position is often shaped by where the company is going—not where it has been. Both management and Boards want to make sure there is alignment between the company’s strategic priorities and what the incoming CFO will contribute to achieving those objectives.

What is your highest priority?: Perhaps the greatest developmental need I see in CFOs and those aspiring to be CFOs is in leadership, specifically understanding how to set a vision and win the hearts and minds of others, both internally and externally. Sometimes I meet candidates who are otherwise highly qualified, but who lack the ability to articulate their vision and be passionate about where their company or career is going.

I advise aspiring Finance Executives to get strategic about their career development as early as possible and adopt a talent development plan. This means thinking about the ROI from each role they take and the skills they build in terms of having the complete CFO toolkit that an organisation will want in their next CFO. First and foremost for finance talent it’s gaining operational experience because it addresses so many elements of the CFO profile companies are looking for: strategic thinking, leadership, and partnering with the business leaders to achieve the overall strategy.

 

Gavin’s expertise and passion lies in people & business growth. After studying Engineering, then Marketing and ongoing studies with the IECL, Gavin has created an extensive network and deep relationships with Executives whom have engaged him for both Search & Selection and human capital advice across Australia since 1998.